Chamber of Construction Industry congratulates President AKD, appeals for effective interventions

Chamber of Construction Industry of Sri Lanka Secretary General/CEO Eng. Nissanka N. Wijeratne

The Chamber of Construction Industry of Sri Lanka, statutorily established as the apex representative body of all stakeholders of the construction industry, yesterday extended its sincere congratulations to President Anura Kumara Dissanayake on his great victory as the ninth Executive President of Sri Lanka. 

The construction industry comprises many stakeholders including engineers, architects, quantity surveyors, valuers, land surveyors, town planners, contractors, consultants, real estate developers, material manufacturers and suppliers, machinery and equipment importers and hirers etc.

The construction industry, in the past, contributed 8-10% to the GDP and provided employment to nearly 1.4 million, both direct and indirect. As such, 20% of our population is dependent on the construction industry. 

However, during the period from March 2020 to end December 2023, the construction industry suffered continuous contractions due to the COVID-19 pandemic, the economic recession, suspension of capital projects, non-payment for work done, import restrictions, high material prices, and high bank interest rates. As such, the construction industry was in turmoil, with around 500,000 losing employment. Even though the construction industry has returned to a modest growth trajectory, the conditions have still not normalised as all suspended projects have not re-commenced.

The new President has the onerous task of effectively intervening to change the development trajectory and to resurrect the construction industry. In our considered view, the adoption of the proposals mentioned below are imperative to transform the local construction industry as an efficient, sustainable, and globally competitive industry, and to facilitate economic growth, attracting more investments to our country. 

Policies to uplift the construction industry with sustainability

1. Projects above Rs. 200 million in value should commence only after a proper feasibility study is undertaken. To ensure this, a National Planning Commission (NPC), similar to that in India, should be established and approval of the NPC should be mandatory for all projects exceeding Rs. 200 million.

2. Enact a Public Procurement Law as recommended by the IMF.

3. At present, there are widespread violations of Government Procurement Guidelines. Procurement should be only on competitive bids on BOQs based on completed designs and documentation to ensure timely completion and to minimise cost overruns. There shall be no unsolicited proposals considered. 

4. Procurement action should commence only if adequate funds have been secured or allocated in the Budget.

5. To ensure transparency in the Government procurement process, Procurement Committees on work contracts over Rs. 200 million shall have a senior professional, nominated by the Chamber of Construction Industry of Sri Lanka, as an industry representative.

6. Enact a Building and Construction Industry Security of Payment Act, similar to the law in Singapore.

7. Implement the proposal of the Presidential Commission on Simplification of Laws and Existing Regulations to ensure the issuance of development permits within three weeks by amending the UDA Act to establish a statutory committee with time limits for granting these permits. As a more effective, lasting solution, steps should be taken to introduce a fully online approval process within 12 months as practised in Singapore now.

8. Establish a development bank to promote innovation and development of projects. NDB and DFCC, which were development banks earlier, have now become commercial banks after privatisation. It is often said that development banks played a leading role in the growth of Asian tiger economies.

9. Amend the Arbitration Act to ensure that arbitration hearings and awards shall be concluded within three months from commencement, similar to the practice in Singapore. Now this alternate dispute resolution mechanism takes a long period, similar to normal Court proceedings.

10. Adopt a Code of Ethics applicable to all stakeholders of the infrastructure and buildings development process. Such a code has already been developed by the Construction Industry Development Authority (CIDA), which can be adopted as a regulation.

11. Exempt housing and apartment developments from turnover taxes as such taxes will be an additional cost to individual buyers of these units.

12. Introduce a housing loan scheme at a concessionary interest rate of 5% repayable over 40 years to first-time home builders, similar to the two generations home loan schemes in Europe.

13. To promote export of construction services by undertaking work contracts abroad, the Government can select 10 proven major contractors in consultation with the Chamber of Construction Industry of Sri Lanka, and facilitate necessary bank guarantees in US dollars for one contract each to these companies to undertake work contracts abroad. Each of these major companies shall award subcontracts to two local companies so that, through this process, 30 local companies will venture on overseas work.

14. Similarly, to promote export of consultancy services by undertaking consultancy contracts abroad, the Government can select 15 proven consultancy firms registered with the CIDA in consultation with the relevant professional institute, and facilitate necessary bank guarantees and professional indemnity policies in US dollars to these firms to undertake consultancy contracts abroad. 

15. Harness the full potential of our graphite, rock phosphate, and mineral sands deposits (in the East Coast and at Aruwakkalu, Puttalam) with hi-tech investments.

16. Enact the Amendments to the Construction Industry Development Act, No.33 of 2014 and the Regulations and Rules thereunder, including the Regulations for Contract Adjudication that were discussed at the National Advisory Council on Construction since 2016, without further delay.

Policies to promote good governance and reduce corruption to attract more FDIs

1. Change the Executive Presidential system to a Westminster type of governance. In this regard, proposals for the 21st Amendment submitted by the SJB in April 2022 are quite noteworthy.

2. Change the present PR system to a mixed system with 160 elected from the earlier electorates on a “first past the post” system, 56 on district PR, based on best runners-up in the electorates on percentage of votes polled, and 15 on national PR. This will avoid the need to campaign in entire districts spending large amounts.

3. Cabinet to be limited to 25 Ministers and 25 Deputy Ministers; Ministry functions only and preferably to be defined by the Constitution as in the USA. Consequently, there shall be only 25 Ministries.

4. CIABOC Commissioners to be appointed by the President on the recommendation of the Constitutional Council selected after a transparent and merit-based process to ensure independence.

5. Any Minister, when charged in a court of law, to be immediately relieved of Ministerial duties, as per the practice in Public Service. Any Minister or MP, when found guilty by any court of law, to be immediately removed from Parliament, notwithstanding whether appealed or not to a higher court.

6. Take effective steps to promote a digital economy with all round cashless transactions, similar to what has been implemented in India.

7. Take effective and practical action to recover ill-gotten assets and corrupt money invested abroad through the Stolen Assets Recovery Initiative (StAR) implemented by the World Bank in collaboration with the UN Office on Drugs and Crime (UN ODC), introducing new laws if necessary.